>> i am adding to konking. >> i like the health care theme, amgen. more fast money at 5:00 p.m. tonight. "power lunch" begins right now. second half of the trading day begins right now and so does the countdown to tonight's presidential debate. it kicks off right now. important data out this morning, setting the backdrop for tonight's discussion. our team of reporters will break down the markets, jobs, housing, all will be front and center tonight. and then the man of the moment, the deal of the day. a live interview with the ceo of t-mobile on his company's headline making deal with metro pcs and we'll tell what you it means for the mobile phone wars. sue herera is at the new york stock exchange. a big day. >> indeed a big day and the markets are watching it very

closely. before we drill down on those key issues that will drive tonight's debate we want to begin with brake breaking news on the corporate front. shares of hewlett-packard down 7%. ceo meg whitman meeting with animal listings right now. the stock is trading at $15.91. jon fortt is in silicon valley. >> reporter: hp shares in free fall today as ceo meg whitman sets the ball even lower than wall street spenexpected saying fiscal 2013 earnings will be between $3.40 and $3.60 per share, versus expectations of $4.05. she says the turnaround will take four or five years an when she arrived, hp was broken at almost every level. a wrong product, an organization that wasn't targeting customers by country and a lack of

specific measurable area. hp business executives are going to be addressing analysts. whitman says profits will erode across practically every segment. the pc and printing group will talk a bit about tablets but mostly about cutting back on the different models they are producing and moving certain ink sales to subscription model. david faber has an exclusive with hp's ceo meg whitman tomorrow on "squawk on the street." one very important interview that you don't want to miss and it is only on cnbc. earlier this week when we had art cashin on with us on monday he flagged tonight's debate as a key driver of the markets this week. let's start with the trading action here. bob pisani joins me on the floor. we're up 40 points on the trading session. >> dow jones industrial average started off very much on the

weak side, 3-2 advancing to declining stocks. at 3:00 eastern time the ism services numbers came out, better than expected. new order numbers p better than expected. that lifted the market. the dollar stronger against euro. when that happens usually materials and energies are weaker. that's what's happening today. there's been some collateral damage with other stocks that are suppliers to hp. advanced micromoved down on that news. that's a new three-year low for advanced micro. >> i'm looking for the silver lining. >> we've been moving up for several days in a row right now and are approaching the highs we had a week and a half ago. >> we'll be following jon fortt and bob pisani. ty, back to you. let's drill down on some of

the economic issues that are going to come up in tonight's presidential debate. a positive read on jobs ahead of friday's employment report. on the other hand, a bit of a red flag being raised in housing. steve leisman and diana olick are all over the data points. steve, the latest jobs data, is it changing in any way the expectations for this friday's employment report? >> not a lot. economists would like to go from the adp data to higher estimates but it's not been that great over the past couple months. there's a lot of of caution out there among wall street economists. data this morning -- up 162,000 from the private sector. that's a bit better than expectations which were in the 150,000, 155,000 range. in august it was revised down to 189,000. the non-farm payroll estimates. we won't know until friday if that is higher. here's the misses we've had over the past three months.

it's been 63,000 heavy compared to the bls private sector report. you can see over the course of the year it's been a little bit on the high side making economists wary about upping their estimates. what has been a little bit on the up side is jobless claims. other data that helped buoy optimism, slightly higher than claims in last month's survey week. the ism jobs manufacturing is at a three-month high for that component. services was down in september but still above the 50 point. i don't think romney turns to obama and says we are doing gangbusters on jobs but they are in the 200,000 range. housing the other part of the story. one more sign that the housing market may be creeping back. mortgage applications surging almost 17% last week. but as more people are looking to buy, that is not good news for the rental market.

new numbers out today raising new questions about whether there will be enough demand for all of those new apartment buildings. diana olick joins us with some worrying new figures. diana. >> reporter: yeah, that's right, sue. apartment demand had been red hot but we've got new numbers out do that show we may have reached the peak. apartment vacancies are still coming down but now at the smallest rate in over two years. absorption of new units also slowing and rent gains coming way down as well. this is an avalanche of new apartments coming online, multi-family housing starts were up 37% in august from a year ago. between 160,000 and 200,000 new units will open in kw? a where has all the demand gone? number one it's gone back to the housing market as it recovers and two, it's gone here to

single family rentals. now this is a booming market as more families get either -- can't buy due to damage credit or choose the flexibility and safety of a rental. investors in single family distressed properties rushing to fix them up now say they just can't find enough to meet the demand. >> i see unprecedented demand, more than i've ever seen in 15 years. our waiting list is already up to four months. if you pass our criteria to become one of our renters, you get the honor of sitting on a four-month waiting list before the next home is available to you. >> but yet another warning on that front. a new report from capital economics says that for those investing in rental properties, the window could be closing but as house prices go up be market on those distressed homes goes down. >> diana olick reporting. thank you. with jobs and housing as critical back drops, let's turn to tonight's debate. president obama and governor

romney in final preparations. the latest polls have the president remaining ahead but maybe by a narrower margin. in trade showing obama ahead by two about a 72% probability of being re-elected. our chief washington correspondent john harwood live at the event site in denver. john, what's the objective for romney tonight? what does he need to do? >> mitt romney's got a very big task. he's got to do a couple things at the same time. first he's got to find a way to dent the argument that bill clinton and barack obama made at the democratic convention about how president obama's done as well as anyone could do in turning the economy around the last four years. secondly, he's got to make a positive case with passion, with credibility for his own economic plans, for how he's going to make life better for 100% of americans. third, he's going to have to deal with that 47% video which

has really taken a toll on his campaign. he's got to do all those things at the same time. we've seen the history of debates, tyler. it is not easy to fundamentally turn a race around but we have seen from our nbc/"wall street journal" poll that he's within three points nationally. still possible for him to win. got get going down. >> amman, there is some buzz about a plan that romney hs apparently floated for basically a $17,000 cap on tax deductions for americans. explain it. you've crunched the number. what's the headline here? >> tyler, the headline here is that the romney campaign e-mailed me this morning on this. they say they want to make very clear this is not a specific proposal from governor romney, that he's just floating one idea among many. the idea that he's put out there though would be a $17,000 cap on deductions. you could take your mortgage deduction, charitable deductions or other deductions up to $17,000, and then no more. that would definitely raise taxes on some taxpayers, even if romney's able to bring the

overall tax rates down, which he says he wants to do. who gets hurt in this scenario? people with huge mortgages. people who donate a lot of money to charity and people who have overall high deductions. they might lose more here than they gain by the rates being lowered overall. that is who's going to get squeezed under this proposal but the romney campaign saying not a specific idea, just kicking around things verbally in the debate. >> amman, thanks. john, what should president obama's objective be? >> he has the same agenda with any football team that has a lead late in the game. don't turn the ball over. he doesn't need to score. he doesn't need to move the ball. he just needs to prevent from the kind of catastrophic mistake that has occurred from time to time in presidential debates. not often. and president obama's not prone to mistakes very often. so he's got a low bar for what he wants to accomplish. we do know that a challenger

merely by taking the stage with an incumbent president sell vated in tvais elevated in the eyes of the american people. president obama doesn't have to hurt mitt romney. he has to protect himself. >> hang on to the ball, no fumbles. john, amman, thank you. everyone, stay with cnbc. it is going to be a huge political night. larry kudlow will kick it off as usual with his program at 7:00. debate coverage rolls right out at 8:00, and goes right through with cnbc analysis. we want to hear from you. tweet us your thoughts on the election using the hash tag #cn #cnbc2012 for a chance to see your tweet in the ticker. let's move over to seema mody for market flash. >> health care will be a big topic in detonight's debate. some talk and speculation that

asstra zen ka is looking at potentially taking over forest labs. talk was sparked by a uk "guardian" article writing astrazeneca could soon launch a bid for forest labs. forest labs shares up around 1.5%. sue? >> it is now official -- t-mobile and metro pcs are indeed merging. under the deal, metro pcs shr s shareholders will get $4.09 a share and 26% worth of a stake in the company. move is aimed at helping t-mobile gain more customers, build out a next generation data network and compete better with rivals like sprint. t-mobile's ceo joins us right here on "power lunch" first on cnbc to talk more about the merger and his growth plans ahead. that big interview coming up in about 20 minutes. and he's one of the most prominent people in investment research today and one heck of a money manager, too. when he speaks, wall street

listens. pimco's bob arnot will tell us how he's making money in today's market. here's a check on some of america's most widely held stocks. stay with us. ♪ chances are, you're not made of money, so don't overpay for motorcycle insurance.

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welcome back to the center

of futures trading, chicago's cme group in particular and power lunch. if you look at intraday chart of 10s, yes, you could see we're hovering in the 1.60s. not a huge amount of action but a dekent amoucent amount of vol. not so much range. but this will be the seventh session where it looks like we'll close in the 1.60s going back to the 25th of september. dollar index, intraday chart, it's doing better. the main reason is because the peso is the only major currency that's higher against the greenback today. open the chart up a bit, look at the symmetry there. 80 was resistance on the left. traders paying attention to that and the recent run-up verses the yen. dollar improving against the yen. sue, back to you. well, today's power player is one of the most respected financial research analysts around. robert arnot is chairman of research affiliates, managing a total of $52 billion in assets including the all assets funds

for pimco. welcome to "power lunch," bob. good to see you. >> good to see you. >> all right. start first of all with one of your contentions. a lot of investors that we hear from now, because of the volatility in the market are using target date fund. you maintain that that probably is not a good bet for them. why? >> well, target date funds take your risk profile and start you out aggressively when you're young and conservative when you're older. intuitively that just rings true, it makes a lot of sense. but, when you go back and test the idea, ironically you find out you finish off 20% richer in retirement. 20% richer if you do the opposite, if you start out conservative and end aggressive. and the reason for that is that a more aggressive stance tends to have, on average, over time a higher return and if you are more aggressive later, you're more aggressive on a bigger asset base. >> how much of this also has to

do with the fact that we're in, to put it lightly, a highly unusual climate and environment right now with long-term interest rates being held at 0% for quite some time. >> well, one of the ironies and one of the sad elements of glad path and target date strategies today is they are pushing people more and more heavily into bond at a time when bond yields with more negative. you're not making money, you're losing money by investing more and more in bonds. so we wind up becoming enablers of bad behavior in washington and supporters of that bad behavior by buying more and more of the bond when yields are negative. >> bob, have you a wonderful reputation and a great record built around the idea that you turn conventional wisdom inside out, whether it's fundamental indexing or this assault on the conventional thinking in target date funds. but i wonder what the real risk

to the fund business is if these target date funds -- which certainly imply that you're going to have a set amount of money on a certain date. what if they don't work out and what should the assumptions be if i'm an investor on what kinds of returns i ought to be expecting in stocks and bonds today? >> well, i think the big challenge for the economy and for the capital markets is an expectations gap. we're aging as a society. work force is growing slower. we're going to see slower macro economic growth. we're also going to see lower returns. yields are lower which means bond returns are pretty lousy. and stock market returns are likely to disappoint also because the yields are low and the growth is going to be slower in the future than in the past. there's nothing wrong with this. if we plan ahead and just assume that our returns are going to be lower than expected, then we'll be fine. the problem is if we encourage people to assume that they can

earn terrific returns and end with a specific retirement bucket, we're leading them into a very dangerous path. >> what if i take your argument that we're going to have to expect lower returns, but i'm not quite satisfied with that and i want to get the best possible return i can. do i need to do something different? move beyond traditional stocks and bonds? >> well, firstly, i think we shouldn't get locked into either a glide path or its inverse. a fixed rules based strategy for asset allocation can lead us into murky territory. i think there's three ways to boost returns in a low returns environment. one is to look outside of mainstream. build a third pillar, if you will. we mostly rely on mainstream stocks and bonds. we have hardly anything in inflation sensitive assets and diversification into alternatives. secondly, look for alpha. try to find managers in

strategies that can have value. fundamental index i think is a really important addition to that tool kit. thirdly, be tactical. when yields on bonds go negative or below the rate of inflation, which tacitly means negative yields, look elsewhere. >> bob, on that note. perfect place to leave it. we appreciate your coming by. bob arnott. let's go to seema with a market flash. >> ringo is suing google over what it claims infringement of its search technology. a judge denied google's request for summary judgment and wants both parties to encage in settlements talks with the judge. that's what we understand. the stock up better than 35%. mark cuban has a big stake in this stock as well. >> thank you, seema. this is a deal that could change the entire wireless landscape. ceo of t-mobile on his company's new deal with metro pcs. it's first on cnbc. but before that we're

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android as it is a completely revamped os with user friendly metro style -- metro style interface that's consistent across devices. year to date, the stock up 21%. >> totally agree. why we agree is because of that windows 8. in time, maybe not this year, but businesses are going to want to have this on all of their devices so they can create once and roll out to everything from your laptop to your phone. >> becoming a much more business centric company not so much tied to personal pcs. ar goss resear argus, the company still derivz most of its earnings from its domestic loan portfolio. year to date the stock is up more than 60%. downgrade. agree or disagree? >> i don't. think analysts should reread his piece. he convinced me who's kind of neutral on this sector to take a another look at this company.

>> you think wrong conclusion. kim, moving on to craig hallum capital upgrading stratasys. in a year the company's stock is up more than 200%. i liked to have bought this one a year ago. right? >> maybe. if i bought it a year ago i'd be selling it. 3-d printers are hot, hot, hot but i think they're a little too premature. the technology needs to have cad and 3-d cad to drive it and i don't think normal mortals can run that stuff. it is a great idea, not really ready for prime time. >> only cads can run it. thank you very much, kim forest. metals markets closing right now. we'll head live to the nymex. and t-mobile's ceo is going to join us first on cnbc to discuss his had merger with metro pcs. what it means for his new company. his rivals, and for consumers.

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i'm sharon epperson on the floor of the new york mercantile exchange where gold prices closing right now around $1,780

an ounce. a rather quiet trading session. traders are waiting for a lot of fundamental news that could move this market. we have of course the presidential debate tonight that you'll be watching here on cnbc, as well as tomorrow the bank of england, the ecb meetings and the fomc minutes that will come out that could all influence the day's trade. back to you. >> thank you, sharon. the trading action here, bob pisani joins me on the floor. it is a battle for bob's attention between technology because that 7% loss in hp is weighing very heavily on the entire technology sector, and energy which is also getting slammed. >> yet this 3-2 advancer to decliners. markets still moving to the up side. the ism services number, new order better than expected. that moved the market around 10:00 into positive territory where we've been all day. you just heard about the weakness in oil. dollar strength on top of weakness in oil. that's slamming a lot of stocks in the energy sector, particularly some of the big driller and oil service names

like halliburton and baker hughes. we have a particular sector of the hardware group, technology hardware group. hewlett-packard on its lower earnings guidance. dell's at a new low. all multi-year lows. advanced micro, a supplier, also moving down. that stock's been a terrible performer for years. >> my ferret iavorite indicator transportation index. >> it has a long way to get parodied to the dow industrials. >> i'll give that you certainly. to the nasdaq and bertha coombs is following the big moves. >> tech is front and center but so is food. kraft foods today trading as two separate companies. shares flat. that's the snack food side. then there is a kraft food side. this today has raised a lot of concern. take a look at the screen grab from the trade at the beginning of the day. some rogue trades apparently done by algorithms.

sent that stock above $57. nasdaq has since canceled those trade. those trades happened on the nasdaq platform, or arka and other platforms. people are saying maybe they shouldn't be. make those algorithms pay for their mistakes. apple reportedly set to launch a new seven-inch tablet has those shares up. the big loser of the day -- leap wireless. thought was they would benefit with a deal from metro pcs. today looks like they're the odd man out. >> bertha, thank you very much. two of the nation's largest low-cost wireless carriers, t-mobile usa and metro p krf s, are merging. complicated deal. combined company t-mobile is going to have 43 million subscribers, $25 billion in annual sales and a potentially easier path to 4g and lte

rollouts. metro pcs down a little bit. deutsche telecom basically flat. deal expected to close early next year, led by our next guest, john legere, appreciate you being with us on "power lunch." this is an exciting day for you. it is also an opportunity for you to speak to some skeptics who have said such things in the press this morning as these are not too two robust growing entities that are combining, these are two companies that have significant operating issues. bernstein called the deal a shotgun wedding. is this a deal that smacks, in some sense, of desperation? >> yeah. thank you for the opportunity to speak to the skeptics, as well as number one, this is a great day for the employees of both companies because the message is sent clearly -- t-mobile is hear to stay. that was a question in the marketplace. employees at both companies should be thrilled.

customers are the big besh ri beneficiaries. affordability, choice and nationwide reach. some of the things that you mentioned are key. we're going to have a much faster deployment to a nationwide 4g, lte, one superior competitive to everybody. we're going to have 20x20 lte capability by the end of 2013. that's going to increase our reach. it is going to be 40% better. let me say it easily for customers. people that used to have one bar are going to have three. people that are three are most likely going to have five. on the financial side, there are $6 billion to $7 billion in synergies. $5 billion to $6 billion of them are easily identifiable. network integration synergies. t-mobile will be a publicent ta after this transaction. a growth story. 7% to 10% growth and 15% to 20%

growth in cash flow. so two companies that are innovative. we're going to shake it up a little bit. this is a great day. >> let's talk a little bit more. i think your point about more bars. more bars is good. i don't care whether they're bars that serve beer or bars on my cell phone. a lot of people question whether you can compete without the iphone. can you and will you get the iphone in this new company? >> couple things. i'm not going to comment on any other negotiations with providers or potential other consolidations at this point. i will demonstrate, you can use the iphone on the network. i happen to have one right here. we have a program right now called the unlocked iphone plan. if in effect are you an at&t customer an your phone sun locked, you can bring it to t-mobile and we can put you up on our network right now and that capability is only going to get better and better. over time we'll see what we can do to have a full handset portfolio.

but whether it is an iphone, or a great samsung galaxy 3, we have a great set of capabilities for our customers and they're going to only get better. >> let me close with a somewhat wonky question about what having a separately traded stock means for t-mobile. what does that allow you to do? what does it say about the future, and what, if anything, does it imply about what deutsche telecom's sort of plan might be for its stake in the company? >> that's a great question. deutsche telecom is committed to the u.s. market. look at this as deutsche telecom's saying. we're doubling down. we believe in the growth of the u.s. market. this market is so much more growing and profitable than european markets. they're in this deal very excited. but what it also does is when we need to respond, we can go and we can tab debt markets, we can tap equity markets to position ourselves, continue to grow in

this great space. it gives us a lot of possibilities an as a great growth stock we think it is going to give investors another alternative and amongst other things, consumers who have been waiting to do business with t-mobile, the network is here. we're here. come on over. it's time. >> mr. ledg >> mr. legere, you've been on the job about a month. you've been a busy man. goldman sachs getting a bid in today's trade. susquehanna raising its third and fourth quarter estimates saying goldman is well positioned for an increase in mortgage trading activity as the fed's qe3 gets going. shares up .5%. as you all know, tonight is the first presidential debate. which issue are you hoping the candidates will focus on? go to finance.yahoo.com and cast your vote right now. meantime, how much would you pay to catch a ride on a private jet? cnbc's wealth editor robert frank is live in manhattan with a look at some very interesting

options. robert? >> thanks, sue. i'm going to take you inside a private jet that you can fly with help from an ipad. how cool is that? we'll tell you how this new plane is part of a surprising new trend in the private jet business toward value and even bargains. that's coming up on "power lunch." [ male announcer ] the markets keep moving.

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eventually, but at what cost to the global economy? then, we're going to debate what is better for your money, an obama win or a romney win. plus, the one thing that wall street wants to hear at tonight's debate. and later on, american airlines says all the seats are fixed. lots of things coming up at the top of the hour. back to you on "power lunch." the world's top asset managers and investors are meeting today to discuss the economic landscape and how to navigate it. our david faber is with them at the barefoot economic summit in larue, texas. >> i've joined by founder, cio of golden tree house and management. they're in bank loans, they're in bond, distressed investments, private equity structured products. credit is the name of the game when it comes to golden tree.

16 billion-plus in assets. talk about high-yield credit overall. high yield continues to have funds moving in to it. are we towards the end of this bull run? >> we certainly are in the end of the bull run of low default rates. i believe -- i'm not talking a year out. talking a couple years out, i believe you're going to see the underwriting standards loosen up. you're seeing not much differentiation between 7% to 8% paper. there's more dividend deals and we believe just starting from 2008 you had a dislocation. you had a spike-up in default rates in '09. it went lower in '10, through '12. spreads are still historically -- they're about average now. >> is that a surprise to you? you're talking about the spreads between your typical junk credit an treasuries of the same duration. they're not at historic lows

despite the fact that money just keeps washing into these junk bond funds. is that a surprise? is it a good signal? bad? >> it's a great question because there's a tug-of-war between historically low absolute yields and still historically average spreads. when you subtract out default rates your pick-up over the rate look good. when you look at asset allocators, they predict ten-year returns of 6%-plus of high yield. yet with the 10-year at 1.60%, 1.70%, that's a big pick-up. >> a lot of high yield now has a 5 in front of it in terms of actual yield because we're all searching for yield. when it comes to this idea of underwriting standards starting to decline, i hear that, i say things are going to get back to a bubble, things are not going to be good. are they not going to be good? >> there is a cycle of life aspect to other credit markets. and because there have been low

default rates, because absolute yields are low to get incremental yield people are going to take more risk. that's going to be through lbos, through dividend recaps, et cetera. what we're seeing in the quality of those deals is poorer today than what it was in the beginning of the year. actually takes about 24 months to cycle through in terms of increased default rates. that's what we expect to happen. >> you've had had a good year performance wise at golden tree. your flagship fund is up nicely. quite nicely. are you changing the composition of your portfolio based on what you're expressing here? >> sure. >> not just within junk bonds. i'm talking actually within the asset classes. >> we have certainly shrunk our gross this year. we also are focusing more on floating rate debt which we feel bank debt is better value than bonds. we still think that bank debt is actually cheap. high yield we feel is about average -- >> i've been hearing that for a while. bank debt is still cheap? a lot of people bought these

clos, these loan obligations. is there still a play in that or has it run out? >> hard to believe, but it's still about 1 h$100 cheap to wh the average has been pre2008 to 150 cheap. we still believe we can get single a and bbbs around 15% total return. you if you look at the aaa, it is still around 1.50%. the average is less than 1.00%. that might be the best risk adjusted part of the clo structure is at the top. >> finally, we've been in these presentations. they are technically on background so i'm not going to share specifics of what was said but i'm curious what has sort of struck you in terms of one of the more interesting things you've heard so far from the various presenters? >> sure. a theme that even though there's a lot of negativity that the dollar and the s&p could be a

beneficiary, that there is one comment how when the economy in the u.s. from the 1870s to the 1890s was very weak, the best performing asset class was actually the stock market. and, it was driven by railroads which had very slack demand but there was creep in absorption and also starting from a very low base. also looking at the stock market as a pick-up in yield, the first time since the late 50s relative to the bond market. >> i bet volumes back in the 1870s weren't much different than they are now. steve, thank you. >> david, i think you're probably right. i guess you have to be a student of history. if you're able to cash in on some of that insight, historical and otherwise, and you're in the market for a private jet, pay attention because the luxurious private jet market is actually

changing and it is changing in a way that may let you get on-board. wealth editor robert frank is live in manhattan with the details on that. hi, robert. >> reporter: hi, sue. thanks so much. we normally think of the private jet industry as riding above the economic clouds, kind of immune to problems, when in fact this industry took a huge hit during the recession. prices down, the wealthy cut back, companies cut back of course. we had had that huge scandal with the car executives in washington. still, there is no sign of recovery but that has led to some great opportunities for buyers and some great real bargains in this business. let's take a look at this plane as part of that whole value proposition. it is made out of a special carbon composite. it makes it lighter, far more fuel efficient and the cabin is bigger so you can squeeze more people in there. where we've really seen a big change is in the prices of used jets. we've got a couple examples we're going to show you now. first, a falcon 900. this sold for $18 million before the crisis. now selling for about $8

million. we also have a hawker that's selling for $9 million. down 40% from 2008. now what's interesting is you don't have to be a millionaire anymore to fly private. prices have come down so much, there are so many empty seats and empty planes flying around that prices have hit record lows. there's a company in california where you can rent a private jet one way to las vegas, to california, or even boston to washington for $499. that's for the whole plane, sue. that may be bad news for the industry, but it is good news for people who want to become part of the jet set. you can read more on our relaunched new website, insidewealth on cnbc.com. >> e-mail me the name of that company. thank you, robert, very much. you can read all about it, the learjet, and much more on robert's cnbc.com area. it is launching today. check it out. it's called inside wealth with

robert frank. insidewealth.cnbc.com. ty, maybe you and i could finally afford a private jet. >> i would call robert frank mr. 1% there. it is not only the content, it is the technology you use to deliver that content. dreamworks' new chief technology officer will join us first on cnbc to talk about the company's move into mobile. and as we head out, let's check out dreamworks. the stock up almost 20% so far this year. [ male announcer ] for the saver, and a big first step.

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one part of the market that's really moving to the downside is crude oil. we're keeping a very close eye on it. down almost 3.68% at $88.51. seema mody has more market news. >> after seeing fourth quarter sales falling due to typical seasonality and a weak spending environment, adtran down 7%. that's a tech stock. dreamworks ramps up its

production slate and amps up its role as a tech leader. first time "power lunch," dreamworks' cto lincoln wallen joins us. nice to have you here. >> nice to be here. thank you. >> tell me how you're moving this company in a different direction in your particular role. you're using cloud technology and various other endeavors as you roll out a pretty aggressive slate of new films this year. >> yes. so as you know, digital media's always driven the technology industry, and today's no different. dreamworks has been able to harness the power available from companies like intel and cloud computing from companies like hp to enable us to make many more movies, each one differ but also harness the power of the cloud to improve efficiency and develop techniques that we

believe will be interesting and used in many different industries, not just film making. >> i would assume it also keeps your costs down using the cloud as you are doing because you have facilities in redwood city. have you facilities in bangalore and various other places so that must be a cost savings as well. >> that's right. we put our studios where the artistic talent is. one of the unique aspects that technology has allowed dreamworks to achieve is to have any one of those artists working on any one of our movies at any given time. that sort of flexibility in both people and digital resources is pretty key to our cost equation and pretty key to the quality of our movies. >> i was talking with an analyst before the show about you and what you're going to bring to dreamworks and are bringing to dreamworks. he made an interesting comment. he said as an analyst that covers the company, i'm on the fence as to whether i should

consider it now a technology company or an entertainment company. are you becoming a tech company? >> i think since its inception, dreamworks has always invested very heavily in technology. after all, we don't use cameras. we manufacture the images completely from scratch. so half a billion digital files. 25,000 coords working to produce these films. we've always been a very heavy investors this technology and we've worked with the leading technology companies to refine their products that ultimately are used in all sorts of industries, in finance, aerospace, manufacturing and retail. so what we're doing right now is really trying to capitalize on that investment and work more closely with our partners and look at how we can be more aggressive ourselves and actually bring the unique innovations we create out into the wider market. so yes, i think right now you

should think of us both as a technology company and a movie company. >> i can't wait for the "penguins of madagascar." thank you for joining us. appreciate it. >> okay. in the next hour, we're going to go to the front lines of the home renovation boom, browse the aisles and talk to a good old-fashioned hardware store owner after this. a.

let's check in on hewlett-packard. it is down 10% at $15.40. an earnings warning from the ceo, hewlett-packard, fun or run? >> i would run. it's been revamping itself for a couple of years. made some big dramatic announcements that it really didn't carry through on. and i don't understand why as an investor you would want to go along for a ride. this is a value trap. it is a classic now and i would stay away from this. >> you would shun, not just run. >> yes, exactly. >> kim forest, thank you very much. sue, down to you. >> we've lost most of our strength in the dow jones industrial average. granted, we were only up 40 points but we're now close to hugging the flat line, only up si